Private Deemed Universities - A model for excellence in Indian technical education? But what about its high costs to students, and so, social impact?

Last updated on May 13th 2014

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I was stunned to see what seems to me as a close-to-the-truth report in 2010 from the US diplomat(s) stationed in India about the Tandon committee report on deemed universities in India situation. Here's the US report, https://www.wikileaks.org/plusd/cables/10CHENNAI41_a.html and here are some extracts and comments of mine on them:

*) "Summary:  India's Human Resources Development (HRD) Minister, Kapil Sibal, is embarking upon an effort to reform higher education in India.  One of his major endeavors is a crack-down on "deemed universities," which is an attempt to end various corrupt practices in Indian higher education.  The deemed university crackdown will punish poorly run "sham" institutions, but also restrains South India's robust private education sector, and strengthens the inadequately equipped state-run universities.  This issue is particularly relevant in South India, where Tamil Nadu had the lion's share of the "blacklisted universities" with 16, and Karnataka had the second most with six.  End Summary."
[Ravi: South India's robust private education sector as against inadequately equipped state-run universities! The US diplomat(s) seem to have got it spot-on!]

*) "While some of these "deemed" institutions did not deserve to be given university status, many in South India flourished post-1990s as job-oriented educational programs free from the state-run universities' bureaucratic red tape and archaic mandatory curriculums. ". [Ravi: Terrific analysis! Students and parents want job-oriented education and some South Indian deemed universities due to their freedom in curriculum design and other matters, were able to deliver it, at a price which some students and parents could afford. And so they flourished. Typical market driven scenario.]

*) "The Tandon task force based its recommendations for withdrawal of "deemed status" on a list of criteria that included: whether the university was a sham, or purely for commercial profit, it was run as a family fiefdom, it lacked academic rigor (no quality research), or it was beyond capacity (lack of infrastructure, too many students with too few faculty.)  Whereas some of these institutions undoubtedly deserved to have their status withdrawn, several institutions with very good reputations were also thrown into the mix.  For example, Vellore Institute of Technology (VIT) and SRM University both located in Tamil Nadu, have consistently received high rankings and have a well-established reputation as top universities, but were placed "on watch" by the HRD.  Furthermore, the Committee put some of these institutions on the "black list" because they were run by family members or politicians instead of qualified academics, an issue that could have easily been resolved with a little notice.  Many of our contacts noted that the problem with this reform is that while it is well intentioned, it was done in haste and many qualified institutions and forward-leaning programs will be cut because of this."

[Ravi: That seems to be it! Why could not a higher education reporter of, say The Hindu, who would have had a somewhat similar assessment of the matter, I presume, write an article on it in The Hindu? Is it because the media (or at least, mainstream media) has a hands-off policy when it comes to probity and transparency in administration of higher education in India? Anyway, many thanks to the US diplomat(s) in India who did the analysis and filed the report, and to Wikileaks for making it available to the public.]

*) ... who said that he would like to eventually do away with all "deemed universities" and have all the bodies of education under one single source, with one regulator, the state government.  In doing so, however, none of the issues brought up by the Tandon Committee would be addressed and there might be no real reform of higher education.  These institutions would be returned to government control, and politicians ... would have increased power, including patronage and influence over hiring and firing of faculty.

[Ravi: Hmm. A lot of food for thought here, for me at least.]

*) "We met with Professor ..., and a member of the Tandon task force appointed to suggest reforms in higher education, particularly regarding the "deemed universities."  ... explained that India's education system is second only to politics as the nation's most corrupt system.  He told us of enormous "under the table" entrance fees (known as "capitation fees" in local parlance), including charges of between $100,000 and $200,000 USD just for a seat at a post-graduate medical college, paid up front and in cash.  (Comment: Our locally employed staff corroborate this story and have personal contacts who have paid large sums as "capitation fees" for seats in medical schools.  This fee is separate from the annual tuition.  End comment.)  ... also told us of an instance when an IAS officer served as a vice-chancellor despite lacking any qualifications to do so.  He also cited one example of a doctoral program which had 110 faculty members (of which only 18 had PhDs) to support 1200 PhD students."

*) [Ravi: The comment below is part of the concluding comment.]

"The issue at stake with de-recognizing the "deemed universities" is that in throwing out some of these "bottom of the barrel" institutions, many very good institutions will also be placed at risk.  Not only will thousands students suffer because of an association with a "blacklisted" university, but future progress in higher education in India is at stake.  By forcing these private institutions to revert back to mandatory state-controlled curriculum, the forward-leaning programs that had been developed in South India as an alternative in order to offer students an opportunity to succeed in fast-growing sectors, such as information technology, will no longer be available.  Programs that were developed to get around the outdated state-run curriculum to offer more modern programs in medical and engineering schools will be cut."

[Ravi: I think that is a very fair comment.]

--- end extracts and comments from/on US diplomat(s) 2010 report related to India's deemed universities ---

Ravi: I came across this interesting Income Tax case in 2010 against Vellore Institute of Technology (VIT), http://www.vit.ac.in, one of the "institutions with very good reputations" mentioned in the above US diplomat(s) report, which provides quite some background info. related to the financials of this private deemed university (some of the other flourishing private deemed universities may have a similar financial background). The document is full of Income Tax legalese and a long one. Here's the doc: http://indiankanoon.org/doc/36037333/. The Chennai Income Tax assessing officer tried to make a case that since VIT has been making huge surpluses and collecting donations forcibly extracted from students (For assessment year 2001-02, the Trust earned a surplus of Rs. 6,80,23,196/- (68 million Rupees; 1 US Dollar is around 60 Rupees now) and had received corpus donations of Rs. 1,26,50,000/-, (12 million Rupees)), VIT must not be treated as a charitable trust but as a business, and so its surplus and donation must be taxed. The Commissioner of Income Tax (Appeals) (CITA) disagreed with the assessing officer's views as he/she said there was no evidence to prove that donations were forcibly taken from students. This view of the CITA was disputed by the assessing officer and so raised in the income tax appelate tribunal. To roughly summarize (there may some slight legalese inaccuracies) the bench agreed with the view of the CITA and ruled that no (proper) evidence has been placed before it that VIT has taken capitation fee (or that donations have been forcibly extracted from students) and so VIT has to be treated as a charitable trust and its donations and surpluses should not be taxed.

The ruling/judgement of the tribunal had some references to the Supreme court views, govt. notifications and this tribunal bench's views about the sensitive topic of education being run as a business, which I have given below with my comments:

9. In its decisions the Hon'ble Supreme Court of India has made it clear that education cannot be run as a business and that the concept of teaching shops is contrary to the constitutional scheme and is wholly abhorrent to the Indian culture and heritage. When the appellant runs an educational institution by collecting capitation fees the same cannot therefore be held to be a charitable institution u/s 2(15) of the I.T. Act and the appellant is not eligible for exemption u/s 11.

[Ravi: Seems to make a lot of sense to me. And I think now I understand where the phrase 'teaching shops' is coming from. The honourable supreme court seems to be using it to refer to educational institutions that forcibly collect donations/capitation fee for admission to its in-demand degree courses from students. I don't know whether the honourable supreme court would extend the meaning of the term to educational institutions that charge high fees from students. While I still feel the phrase is somewhat unfair to the teaching profession (a 21st century teacher typically can't be expected to lead a frugal, simple and inexpensive life; he/she needs a decent salary; a decent salary for the teacher has to come from somewhere), I guess it is a phrase that seems to have entered the Indian academic administration lexicon.]

...

We find from page 36 of statement of facts that the Government Notification prescribing fees for unaided self financing engineering colleges prescribes 3 different scales of fees with the nomenclatures of

(a) Free seat category

(b) Payment seat category

(c) Non resident Indian students

[Ravi: During my college days (late 70s & early 80s) there used to be two types of seats: govt. seat (which is referred here as free seat - it is not free as will be shown later) which would have low tuition fee and management seat/quota which would have donation/capitation fee (perhaps the capitation fee was unofficial, but it was well known to students & parents/guardians) and/or higher tuition fee. Now a Non Resident Indian (NRI) student category has got added to tap the well-off parts of the Indian diaspora.]

We find that there is a significant difference in the scale of fees for each category of students. Obviously, this is because the Government, in its wisdom, recognizes that unaided self financing educational institutions cannot be run by charging the lower fees charged by aided financial institutions. Therefore, the Government has permitted them to charge higher fees for the different categories. We find from the admission regulations and other documents submitted that 5% of the seats sanctioned by the University of Madras can be given to NRI students who are required to pay the highest scale of fees of Rs. 39200/- + 1000 Dollars. Out of the remaining seats 50% is under the "Free seats category" for which the fee prescribed is only Rs. 12800/-, the remaining 50% falls under "Payment seat category" which attracted a much higher fee of Rs. 47200/-. The reason for narrating the above facts is to appreciate the bigger picture in the field of education in our country. Traditionally education and health were considered the exclusive obligations of the State and was expected to be provided free of cost; subsidized rates or, at cost, to the different segments of the society, depending on their need for support from the State. However, over a period of difficult financial times, and population explosion, when the State was unable to find the necessary resources to discharge its traditional or constitutional obligations, the State found new ways of catering to its citizens in the fields of education and health.

[Ravi: The socialist/welfare-state model of the state providing free or very low cost education and health has been a rather dismal failure in India over the past few decades that I have known/experienced these sectors, as the quality of these free services are usually not so great. They are typically availed of by only those who cannot afford the private sector education and health services.]

One of the ways is what is popularly called as "Public private partnership" in which the State's function is outsourced to the private sector. While doing this, the Government had to take into account the fact that, while its ability to raise resources by tax and borrowings was unlimited, at least in theory, the resources of the private sector were limited. The State had faced one more difference between the motivation for investments by the State and the Private Sector; ie. - while the State can look at the aforesaid services as a mere "Cost Centre" the "Private Sector" neither can, nor be expected, to look at these functions as a cost centre. Hence, the Government devised ways by which the revenues of such private sector unaided educational institutions could be augmented so as to provide adequate revenues to recoup the investment, provide reasonable return on investment and to provide adequate surpluses to facilitate expansion and modernization. The three tier fee structure prescribed by the Government for different categories of students is a means to achieve the above objective.

[Ravi: Seems quite sensible to me. I mean, the state just does not have the money and/or management skill/structure to deliver the quality of services needed by the people. It may be able to do some service for some sections of the populace but simply is not in a position to cater to all the sections wanting such services. So public private partnership seems to be a possible way out of the problem.]

14. The reason for presenting and analyzing the macro view on the subject is to appreciate the point that the Government, in its wisdom, has consciously permitted charging higher fees from some students in the case of unaided colleges to achieve its aforesaid objectives. This policy is nothing but a "Cross subsidy" by the affluent students to the needy students, as the State, which was traditionally/constitutionally bound to provide these services, could not do so. Hence, the charging of higher fees from a certain percentage of students will not be detrimental to the "Charitable" nature of the institutions as this charging of higher fees from the affluent students is done only to subsidise the cost of education of the needy students especially when this scheme of "Public private partnership" is an instrument of State policy. We find support for our above view from CIT vs Pulikkal Medical Foundation Private Limited, 210 ITR 299 (Ker) and Breach Candy Hospital Trust vs Chief CIT 322 ITR 246 (Bom). A careful appreciation of the aforesaid macro view can only lead to the irresistible conclusion that charging of higher fees from affluent students or raising funds for the laudable object of education, which is traditionally a State function, through donations, by an unaided self financing educational institutions cannot deter the "charitable" nature of the activity and in any view make such activity "Commercial" in nature.

[Ravi: Voluntary donations clearly is not an issue. It is when the donations become forced that the law and income-tax seems to frown at it, provided there is evidence to establish that the donations were forced.]

--- end extracts and comments of Income Tax tribunal bench ruling ---

Ravi: This article, dated March 24th 2012, reports that G. Viswanthan, Chancellor, VIT, stated that private higher educational institutions "were forced to ask students for capitation fee", http://www.telegraphindia.com/1120325/jsp/nation/story_15292366.jsp. An additional extract from it:

"The HRD ministry has introduced the Prohibition of Unfair Practices in Technical Educational Institutions, Medical Educational Institutions and Universities Bill in Parliament. The bill provides for a penalty of up to Rs 1 crore on an institution charging capitation fee."

[Ravi: 1 crore is 10 million]

Ravi: I later came across an article dated Sept. 2013 where the (Indian) Supreme Court has deemed capitation fee as unethical and illegal! Here's the article, http://archive.indianexpress.com/news/capitation-fee-demanded-by-private-colleges-illegal-supreme-court/1166307/, and a small extract and comment:

Private technical and medical colleges demanding capitation fee from students is illegal and unethical, the Supreme Court has said and asked the Centre to make laws to put an end to such practices which deny admission to meritorious financially poor students in those institutions.

[Ravi: That settles it for me! I guess all it needs now is Parliament enacting laws (if they are not enacted already) and then capitation fee will become clearly illegal in India with an associated significant punishment (monetary fine and/or imprisonment as well). That should scare the management/executive seat quota guys from asking for donation money in exchange for a seat. Will such law(s) also prohibit private deemed universities from charging high fees? That remains to be seen (no such law seems to be in place now).]

--- end article extract and comment ---

Ravi: In 2014 the situation is that, over the past few years (maybe in 2010 itself), the deemed universities at risk got together and challenged the Tandon committee report in the Supreme Court. The lack of due procedure in the Tandon committee report seems to have got highlighted and that seems to have blocked the execution of the report's recommendations (removing deemed university status for 44 deemed universities (now it is 41 universities), and putting some others 'on watch').

The latest on the matter as reported in The Hindu seems to be this article dated April 28th 2014 reporting on events in the Supreme Court hearing on the matter, UGC wants fresh inspection of 41 deemed varsities, http://www.thehindu.com/news/national/ugc-wants-fresh-inspection-of-41-deemed-varsities/article5957101.ece.

Here's a recent article dated May 1st 2014, which shows how much in demand among students and parents, one of the South Indian deemed universities which was put 'on watch' is: Vizag student tops VIT entrance exam, http://www.thehindu.com/news/national/tamil-nadu/vizag-student-tops-vit-entrance-exam/article5966851.ece. Some extracts and comments:

... secured the first rank in the VIT Engineering Entrance Examination (VITEEE) 2014, conducted by VIT University, Vellore, last month for admission to 3,500 seats in 13 B.Tech. programmes on its Vellore campus and 500 seats in five B.Tech. programmes on the Chennai campus.

According to a VIT release, 1,84,483 candidates took the test across 112 Indian cities and in Dubai from April 9 to 20.

[Ravi: So the deemed (engineering/technical) university, Vellore Institute of Technology, VIT, http://www.vit.ac.in/, put 'on watch' by the Tandon committee (in 2010) had over one hundred and eighty four thousand students across over a hundred Indian cities vying for admission to just four thousand seats! And they have their own entrance examination with a proper-looking website/weblinks associated with it: http://info.vit.ac.in/admissions.asp. Surely, VIT must be doing a decent job of teaching engineering/technology and also helping passed out students to get decent jobs, for its seats to have so much demand. There must be/may be other factors due to which the Tandon committee put it on the watch list.]

...

“Our admission is merit-based, being based on the marks secured by the candidates in the entrance examination which we conduct,” he (G. Viswanathan, VIT Chancellor) said.

--- end extracts and comments on VIT entrance exam article ---

VIT has been ranked the no.1 private university in India in 2014 by Careers360, http://www.university.careers360.com/articles/top-100-universities-in-india-2014 (the first list is the public universities list followed by private universites list). [Careers360 says it is "India's Largest Student Community and Career Counselling Platform", http://www.careers360.com/about-us.] The universities of India are typically/officially categorized as central, state, deemed and private universities, http://en.wikipedia.org/wiki/List_of_universities_in_India. For the above mentioned rankings careers360 has a simpler categorization of public and private depending on whether the institution is fully funded by the government or not. Central and state universities, I presume, are categorized as public, and private universities as private. But deemed universities, http://en.wikipedia.org/wiki/List_of_deemed_universities, it seems to me, are categorized (in the above mentioned rankings) as public or private based on whether they are fully funded by the government or not.

After the rankings table, the careers360 article above states, "What is interesting about the Private Universities in India is that amongst the Top 10 institutions, nine belong to the Deemed Varsity category and four are venerated Engineering colleges. In other words, the autonomy these institutions have gained on account of their status has done wonders to their performance, a fact highlighted by Dr. G. Vishwanathan, Chancellor of the VIT University, this year’s Top Private University in India."

Ravi: I looked up VIT's fee structure and compared it with govt. quota fee structure. VIT fees are quite a bit (see http://www.vit.ac.in/admissions/Fee_Structure_ug.asp - 1.55 lakh (1 lakh is one hundred thousand) per annum for B.Tech., and also see http://www.vit.ac.in/admissions/Fee_Structure_pg.asp - 2.47 lakh per annum for MBA, 1.74 lakh p.a. for MS Software Engg., 2.84 lakh p.a. for M.Tech. - CSE, M.Tech. - IT) as compared to state engg. universities (http://www.valliammai.co.in/fee_structure.html, affiliated to Anna University, - (for govt. quota seats) 45,000 (per annum I presume) for B.Tech., 30,000 for MBA, 45,000 for M.E. - CSE). Hostel fees are not included in this. VIT's hostel fee structure is available here: http://www.vit.ac.in/admissions/HostelCharges.asp (minimum charge seems to be Rs. 60,000 for the room per semester and Rs. 40,000 for food per annum; that comes to a minimum charge of Rs 1,60,000 per annum for room and food - I hope my calc. is correct). The other college (govt. quota one) has a hostel related web page but that does not list the charges, http://www.valliammai.co.in/hostel.html. Also, I could not find fee structure details for management quota seats in this college website.

A B.Tech. student in VIT then would pay Rs. 1.55 lakh (tuition and related fees) + Rs. 1.6 lakh (hostel fees) per annum i.e. over Rs. 3 lakhs (300,000) p.a., which makes it over Rs. 12 lakhs over the minimum 4 year period to finish the degree program. That is a very expensive, almost unaffordable, figure for lower middle-class Indians let alone poor Indians. Such charges could be borne only by upper middle-class and rich Indians. Though I don't know how student loans from banks comes into this picture. Maybe such loans, given the excellent campus job placement record of VIT (which would make loan repayment not so much of a hassle), makes it possible for lower middle-class Indians to take up VIT's engg. degree programs.

I must say that such high costs for engineering/technical degrees in India cause me a lot of unease. I understand the economics part of it and that you need to pay well to get good quality in most fields, so why get upset if the same gets applied to technical/engineering (and medical) higher education? I don't have a good and well thought out answer to that question, right now.

So VIT's fees (excluding significant minimum hostel fees) are roughly 3 to 6 times the fees (excluding hostel fees) of govt. quota seats in the other college mentioned above. I think the govt. quota fees are fixed by the state government and so would be the same for govt. quota seats in other engineering colleges (maybe there is some variation between urban and rural colleges in the state (Tamil Nadu) as rural students may have lesser paying capacity).

A point to note is that VIT's fee structure page simply does not mention govt. quota seats at all! So, perhaps this private deemed university not only enjoys significant freedom in designing its syllabus and degree program offerings but also seems to have full freedom for fixing the tuition and hostel fees for all its students! That makes it a complete free-market model for technical higher education! In India!!! Hmm. This is really some food for thought for me.

I think this high cost aspect of education in some deemed (technical and medical) universities, notwithstanding their excellent teaching standards/reputations, must be causing a lot of unease in some top higher education planning and administration folks as well as the political leadership in the country. What if such a model starts dominating technical (and medical) higher education all over India? That may have lots of social, and so, political implications due to the majority of Indian higher education students (from poor and lower middle classes) feeling that they been excluded from such higher educational institutions by its high costs.

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Update on May 5th 2014:

I thought that I must mention in the conclusion part that I am very happy to see the apparent excellence in technical education private deemed universities like VIT have achieved. So, it can be done in India (private sector technical education excellence without any government funds). However, its high costs to students, is a serious concern for replication of the model on a large scale. Can there be a variation of the model which provides technical education of good quality, even if it is not excellent quality, but at an affordable price for the poor and lower middle class Indians in both urban and rural India? I think it is an option worth exploring, especially in conjunction with new education technology like MOOC's.

-----------------------------------------------------

The Hindu on May 12th 2014, carried a rather distressing article, Medical education set to become costlier (in private colleges in Andhra Pradesh), http://www.thehindu.com/news/cities/Hyderabad/medical-education-set-to-get-costlier/article5998878.ece

Some numbers from it:

In govt. colleges tuition fee is Rs. 16,000 p.a.

Current fee structure in private colleges is split into four categories:

• Category A for 50% seats: Rs. 60,000 p.a.
• Category B for 10% seats: Rs. 2,40,000 p.a.
• Category C (Management Quota) for 25% seats: Rs. 5,50,000 p.a.
• Category D (NRI Quota) for 15% seats: Not specified (i.e. they can charge any amount!).

The private colleges are demanding a uniform fee of Rs. 10,00,000 (10 Lakh) p.a. for all students doing away with the above categories. [40 Lakhs for 4 years just tuition fee for all doctor-students!!!] [1 Lakh is one hundred thousand.]

The author of the article presumes that the govt. authorities, if they accept the private colleges demand of doing away with categories, may settle for a fee of Rs 3.5 to Rs 5 Lakhs p.a. for all students.

Assuming a 4 year MBBS degree and middling figure of Rs. 4 Lakhs p.a. for all students, the tuition fee over a period of 4 years becomes Rs. 16 Lakhs for all students. (Hostel fees, cost of books etc. have to be added to this.) [Internship after the degree, for a year perhaps, would involve stipend being paid, even if it is a low stipend, to the freshly passed doctor.]

Compare that with Rs. 64,000 tuition fee over 4 years in a govt. college! No comparison at all! My God! If the youngster cannot bag a government college medical seat then putting a youngster through private medical college, under the assumed fee structure above would be a huge financial challenge for lower middle class families, and just about impossible for poor families.

I don't think the state governments in the new states of Telangana and (residual) Andhra Pradesh would want to give such a shock to poor and middle class medical student-aspirants and their parents who cannot get govt. college seats. In all probability, they may continue with the current fee structure for private medical colleges, perhaps marginally raising fees in the various categories.

Two comments on the article are very telling/informative:
1) One says it is an open secret that some private medical colleges are asking for a capitation (donation) fee of Rs. 60 to 70 Lakhs, in addition to tuition fees.

2) The other raises serious concerns that medical fees increase will ultimately result in medical expenses for the public, which are already very high, to become even higher. It says, in Hindi, that the common man will die filling the pockets of such doctors! [Ravi: I think these words should be pondered on seriously. If a student becomes a doctor by his/her family paying tens of lakhs of Rupees to the private medical college, will he/she not have a single-minded focus of recouping this investment, and then some more, by charging patients very heavily either directly as an individual medical practitioner/proprietor of a small hospital, or indirectly as a very well paid doctor in a 'corporate' hospital? [In India, corporate hospitals, are very expensive but excellent quality hospitals. They are probably known as corporate hospitals because their major clientele may be the well-off employees and directors of the Indian corporate sector.]]